The Status Quo Persists

So everyone is buying FEYE now because they feel it can protect them from iCloud hacks, all pertaining to naked photographs being disseminated for public consumption. Pure, unadulterated, rubbish. Nonetheless, the momentum is in favor of internet security names now, so be it.

My TLT is getting hammered, post dividend, and utility stocks are coming in. So what?!?!

Alibaba is coming public this month and there is nothing to change the status quo, from now until then, other than a geo-political event. My intention is to be very patient, edge into utilities on pullbacks, and generally take it easy, leading the life of leisure that I was intended to lead.

While all of you slave over hot stoves and file TPS reports, “The Fly” sits in his parlour, listening to Billy Holiday, watching the neighbor chop down 15 trees in his backyard.

The pullback is coming and when it does you’re all gonna be shining my shoes.

THE RUNNER IUP DRAWING

Winning number: 427

THE GRANDE PRIZE WINNER

Winning number: 392

We will know who these numbers belong to shortly. Soon after, we will email you and paypal you the winning prize.

ChessnWine is doing a drawing right now, which will be recorded and broadcasted here shortly.

There are 908 tickets. Of which, one person will receive a 2nd place prize of $500 and the grande prize winner will win $1,000.

DEVELOPING…

When taking defensive positions, we tend to believe that somehow the market is watching us, waiting for us to capitulate and close out the bearish/defensive positions so that the market can really head lower–in earnest.

The market isn’t watching you, idiot, and there is nothing wrong with taking a stand–like a man.

September is, by far, the worst performing month for the market. There are several geo-political events that could harangue investors, leading to a small rout.  Remember, the largest IPO in the history of man, Alibaba, is being priced this month and it would be very timely for the market to pause after our banker friends make a mint in the underwriting.

I am betting on a risk off environment and a race for yield, which should buoy bonds and dividend paying stocks, like utilities.

That’s it. Plain and simple. I have nothing else to say to you people, so go away now.

I am done for the day and perhaps for the rest of my life. I took liberties to sell, mind you, all of my XONE position. I had a look in the mirror, or the looking glass as some like to call it, and pondered to myself: “why in the world am I long this stupid 3-D stock?” I immediately took action and sold it before it could drop again. It had made a miraculous comeback and I locked in a 5% gain.

At the end of the day, I am loaded up in TLT, cash, utilities and a sundry of exotic and unique stocks–most of which are trending higher.

I wish all of you the very best, even though you don’t deserve my well wishes. But this charade, this fanatical, servile, march higher is coming to an end. Failure to acknowledge the opinions of those who know better than you might lead to your ultimate and untimely death from the stock market game.

I bought EXC and ETR.

With the Islamic State on the move, cutting heads off along their way to Allah, western treasuries continue to gain steam. I cannot stress this enough to all of you lads, drunk about the water cooler, drinking gin from a water bottle.

There is a safety trade taking place, at the same time application software stocks rip through roofs.

This is what I am going to do.

I will collect another monthly dividend from my TLT position, then liquidate it in september. I just sold out of my ECOM position because it refuses to rally. I don’t have time for that, so I took a 3% loss. With the cash on hand, I am going to buy a basket of utility stocks–some today, others next week.

I am going to hold said basket through september, or until I am proven right or wrong (this gives me room to wiggle). The way I see it, buying utilities is a preferable way to fade this rally without actually fading it. I don’t want to just go to cash because my temperament doesn’t allow me to sit idle for long periods of time.

Longer term, I still own a crap load of stuff, from GILD to ICPT to SLCA to HAIN. If the market melts up, I will not miss it entirely. I am simply shifting my trading assets into a bomb shelter.

Stay tuned.

Let’s assume that I am wrong about the coming correction. The September surprise never comes and we gingerly trade up until the New Year. All of the high beta stuff continues onward, trading up to 20, 25, even 30x sales. No one gives a shit, total honey badger market, and everyone gets rich– or dies trying (extra 50 cent).

But what if I’m right? How much downside does a stock trading 20x sales have in this market?

Well, I will have you know, CSCO was trading 22-25x sales at the peak of the market in 2000. Do you know where CSCO trades today?

2.5x sales.

Do you know where it traded in 2001?

5.5x sales.

Just imagine the downside pin action of that stock price and the people who got caught flat footed. I was one of these people, unfortunate and young, rich and careless: utterly retarded.

In September of 2000, the correction, in earnest, began. The market had gone up from the May lows and everyone was doing 100k in monthly gross commissions–until the party ended. CSCO dropped by 20% that month and went down the sewer drain ever since. I am not suggesting the market will endure that sort of pullback. However, it would be unworldly of you to not acknowledge that the drop in March-May was ‘special’ and not ordinary. It was bid less and no one believed we’d rebound.

Well here we are, living to tell the story, at new highs. I haven’t quite recovered from my losses yet, because I’ve been taking a methodical approach. Even still, I cut my losses from -37% to -13%, which isn’t too bad when considering the dire straights I was in.

Here is the reason for the post.

Back in 2000, had you shorted stocks in September, you made a mint. But there was another way to make a mint, without having to accept the idiot nature of being a short seller and the risks associated with such blackguardly actions.

Buy utilities.

I have a long list of utes that I am eying and will discuss in The PPT over the next few days. However, the XLU can suffice and did so in September of 2000, netting a 14% return amidst the agony and pain of once proud and brave stock brokers, like myself, then lined up for execution.

To this day I am still amazed at the people who come to visit the site, lacking decorum, generally sucking at life and throwing meatloaf at his fellow neighbors. I will have you know, “Le Fly”, as he is popularly known in France, is watching all of you, keeping a close eye on everyone–as if it was his duty to do so. I know where you live, where you dine and when you go to sleep.

DON’T MESS WITH ME, CHICO.

Stocks fell today, but many momo names like TWTR and XONE moved higher.

My largest position, TLT, keeps trending higher, as Russian oligarch money scurries about to find a home with safety. There is an arbitrage play between European and American treasuries, right now, and I believe TLT prints $120 tomorrow.

Some of my long term positions, like SLCA, GILD and HAIN continue to hit new highs. It feels good; but we’re definitely due for a pullback and soon.

There are three main drivers in this market, by which people are making fortunes in.

1. Energy

Whether it be alternative energy stocks, like PLUG, BLDP, PEIX or GPRE, investors want it. But there’s a better way to play it. We are in the middle of a renaissance in energy production–thanks to break through methods and technology. In energy, horizontal drilling has changed the game. The best way to play it is through fracking sand companies. There are lots of drillers and plenty of companies who can get the oil. But there are only a select few who supply the sand necessary to frack. Those stocks are EMES, HCLP and SLCA.

2. Biotechnology

I spoke to the good Dr. yesterday and asked him “Doc, if I told you 10 years ago there would be a cure for hep C and progress in NASH, would you believe me?” He said “never in a thousand years.” You may not realize it, but there is some serious and great progress being made in medicine. Look at the share prices of some of the largest biotech stocks–absolutely staggering. GILD cured hep C. ACHN is coming out with a competing drug, even cheaper. ARWR thinks they have a CURE for hep b and ICPT can reverse fatty liver. If you are invested, you must have exposure to this space.

3. Social Media

Humans are pack animals. We need to touch and talk to one another (no homo). When the internet was invented (thank you Al Gore) and web 1.0 rolled out, the world thought it would be used for information gathering and E-commerce. Companies like AOL, YAHOO and AMZN took the world by storm. A little later on GOOG came on the scene and revolutionized the way the human race sought information (fuck the library) and shortly thereafter venture capitalists started to fund companies who connected people. The first kind of social media was in the form of dating sites, like Match.com. You may not know it, but Match, a subsidiary of IACI, is enormously successful. Then a slew of social media companies emerged and changed the way the human race made decisions. We no longer needed a professional restaurant critic to tell us if Mel’s Diner was a dump or not. We had a consensus opinion by fellow foodies to give us the scoop. Companies like PCLN, YELP, TRIP, LNKD, FB, TWTR and Z are improving quality of life for the world.

These are ideas worth striving towards, a renaissance in productivity and innovation, and definitely worth our time as investors.